Tinder’s Star is Still Rising

Tinder
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A recent report of Tinder’s financial worth shows that its users aren’t going away anytime soon. The massively popular dating app is poised to increase its value and market share further over the next year. According to Market Watch, Tinder is growing at such a rate that Barclays predicts its valuation will reach $1.1 billion by the end of 2015, adding to IAC’s current $5.68 billion market cap. IAC owns many of the most popular dating sites, including Match.com.

What makes its value so high, considering the app is free for download? The answer is in the sheer number of users who download the app. As with most online dating sites, perception is key: the more users a site has, the more people will gravitate to it because they think their chances of getting a date, relationship or even hook-up increase.

Tinder’s popularity has taken off thanks to younger daters who embraced the mobile technology and liken Tinder to a game that is easy and fun to use. Plus, it has taken the stigma that is part of online dating away, because the app is mainly to support single people meeting each other casually as opposed to those looking to find serious relationships.

Tinder’s popularity is not just PR buzz. Its growth in the past year has been explosive, with 750 million swipes per day reported in February of 2014, up from 5 million in December of 2013. Today, it manages more than a billion swipes per day (resulting in 12 million matches each day). According to Market Watch, Barclays expects Tinder global daily active users to reach 20 million by April, or 40 million on a monthly active user basis. It also expects Tinder to generate as much as $180 million in revenue in 2015.

How Tinder will get this kind of revenue is unclear. Lately though, they have been floating a few ideas, including a “freemium” service where basic use of the app is still free but restrictions are in place that can be lifted for a fee - like the number of matches you get, or how many photos you see, or the ability to communicate. The founders don’t want to advertise on the app, but they are open to partnerships that would generate revenue from “real world behavior,” though they don’t define what that looks like. They are also focused on the age of Tinder users, and how they might evolve in their dating preferences as they get older. Right now, Tinder is mostly a product that young people use, especially teens and young twenty-somethings - those who might later graduate to a more serious pay service like Match.com.

Eyeballs are currency however, at least to investors, who see Tinder as a golden opportunity. For more on this dating app you can read our review of Tinder.